The British economy stagnated in the last quarter of 2019 as high political uncertainty weighed on business investment and manufacturing production.
Gross domestic product posted zero growth in the last quarter of 2019 compared to the previous three month period, according to data released by the Office for National Statistics on Tuesday.
The reading is down from an upwardly revised 0.5 per cent expansion in the second quarter, and was in line with economists’ expectations.
“There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry” said Rob Kent-Smith, head of GDP at the ONS.
Compared to the last quarter of 2018, the economy grew 1.05 per cent, its slowest pace since the first quarter of 2010.
Manufacturing and businesses investment were both a drag on the quarter-on-quarter change.
Manufacturing production fell 1.1 per cent compared to the previous three months, while the services sector — which account for about 80 per cent of the economy — expanded by 0.1 per cent. Business investment contracted more than expected with a 1 per cent fall. Economists polled by Reuters had expected a milder contraction of 0.6 per cent.
Since the Brexit referendum in 2016, business investment growth has been below both peer countries and UK historical standards.
However, the economy expanded 0.3 per cent in December compared to the previous month, providing the first economic data for the period that includes the post-general election of December 12. This was better than the 0.2 per cent expected by analysts.
In its last monetary policy report, the Bank of England warned that “if growth stays weak, interest rates could fall”.
Across the whole of 2019, GDP was estimated to have increased by 1.4 per cent, slightly above the 1.3 per cent growth seen in 2018, but well below the rate of around 2 per cent or above of the previous five years.
Sterling, which had been trading around its lows of the year earlier on Tuesday, rose 0.2 per cent to trade back above $1.29
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February 11, 2020 at 04:47PM
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UK economy stagnated in final quarter of last year - Financial Times
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